AIG pays $10m civil penalty to SEC
The world's largest insurance group has paid a $10m (£6.2m) civil penalty to the US Securities & Exchange Commission following allegations of accounting fraud.
Link Enforcement: Safeguarding the standards
AIG paid the money without admitting or denying any of the allegations, which centred around claims that it set up a scheme with wireless telecom group Brightpoint to smooth earnings, contravening accounting principles.
This arrangement between AIG and Brightpoint allowed the telecom to reduce a $29m loss by $11.9m, according to the SEC.
In a release, the SEC said: ‘The penalty reflects AIG’s participation in the Brightpoint fraud, as well as misconduct by AIG during the Commission’s investigation of this matter.’
AIG said it had taken steps to correct the mistakes relating to Brightpoint, the FT reported.
Brightpoint has agreed to pay a civil penalty of $450,000 and has also instigated best practice in corporate governance and adopted stricter internal controls.
Stephen Cutler, director of the SEC’s division of enforcement, remarked: ‘This case shows that the Commission will pursue insurance companies and other financial institutions that market or sell so-called financial products that are, in reality, just vehicles to commit financial fraud.’